Zoom has got into the acquisition market with a cloud deal that has stoked curiosity about its future business plans. Per TechCrunch, Zoom is taking advantage of the impressive rise in its stock price in the past year to make its first major acquisition.
The popular video conferencing firm, which was valued at about $9 billion at its IPO two years ago, said Sunday evening it has agreed a deal to buy cloud call centre service provider Five9 for about $14.7 billion in an all-stock transaction.
20-year-old Five9 will become an operating unit of Zoom after the deal, which is expected to close in the first half of 2022, the two firms said.
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The proposed acquisition is Zoom’s latest attempt to expand its offerings. In the past year, the video conferencing software has added several office collaboration products, a cloud phone system, and an all-in-one home communications appliance.
The acquisition of Five9 — which has amassed over 2,000 customers worldwide including Citrix and Under Armour and processes over 7 billion minutes of calls annually — will help Zoom enter the “$24 billion” market for contact centers, the company said.
“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Eric S. Yuan, founder and chief executive of Zoom, in a statement.
Joining forces will offer both firms “significant” cross-selling opportunities in each other’s respective customer bases, the two firms said.
“Businesses spend significant resources annually on their contact centers, but still struggle to deliver a seamless experience for their customers,” said Rowan Trollope, chief executive of Five9.
“It has always been Five9’s mission to make it easy for businesses to fix that problem and engage with their customers in a more meaningful and efficient way. Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions, particularly Zoom Phone, which will enable them to realize more value and deliver real results for their business. This, combined with Zoom’s ‘ease-of use’ philosophy and broad communication portfolio, will truly enable customers to engage via their preferred channel of choice.”
The two firms will do a joint Zoom call Monday to share more about the transaction.
However, the deal has opened speculations that Zoom may be diversifying in view of post-pandemic when office activities fully resumes, potentially reducing use of teleconferencing and curtailing its revenue.
Zoom’s capitalization has skyrocketed to as much as $48.8 billion, as the pandemic forced a shift to work from home that has seen millions embrace the teleconferencing technology. But it is gradually declining as more people get vaccinated, and many firms such as Google and Apple encourage employees to get back to office.
A diversification to other businesses will help Zoom to keep its revenue from spiraling post-pandemic.